East African financial market regulators can start investing in Kenya

Kenya has called on the East African financial market regulators to invest in robust information technology systems to reduce losses occasioned by failure of the bourses trading systems.

Speaking during the launch of the Capital Markets Soundness Report in Kenya's capital, Nairobi, the director of regulatory policy and strategy at Kenya's Capital Markets Authority (CMA), Luke Ombara opined that the automated trading systems across the region had witnessed an increase of system hitches which impact trading activity at the bourses.

"On April 1, the market trading infrastructure experienced a delay in opening due to unavailability of the central depository system, with trading commencing at 2.55 p.m. with 15 minutes pre-open and two hours and ten minutes of continuous trading to close 5:00 p.m., resulting in a turnover value of 369.7 million shillings (USD 3.69 million) for the day, a decrease of 44.4 percent from the previous trading day," he said.

Luke Ombara cited that similar challenges occurred in October 2018, leading to an extended delay in trading hours by more than four hours, an impact which led to a drop in equity turnover for the day. Ombara said improved systems will increase opportunities for improved capital markets' infrastructure in future within the region as well as on the global landscape. "Adopting a strong IT system within the market infrastructure will see safer, cheaper, more robust and efficient transactions within the markets which can in turn significantly boost trading liquidity," he added.

Wycliffe Shamiah, CMA's director of market operations, hailed concerted efforts by the Nairobi Securities Exchange (NSE) and Central Depository and Settlement Corporation Limited (CDSC) to upgrade their IT infrastructure and called for fast-tracking to ensure the challenges being experienced are fully addressed.

"NSE is set to have a new IT infrastructure system by June 2019, whereas the CDSC is at an advanced stage of upgrading its systems, there is need to fast track on the launch which has been postponed a number of times now," Shamiah said.

He said plans were underway to develop a capital markets development framework that will pave the way for establishment of stronger and more united capital markets within East Africa as well as implementing the East African Community (EAC) capital market infrastructure, a project which was initiated in 2011 by the EAC Secretariat, in collaboration with the World Bank.

Shamiah said the improved systems within the markets will further offer efficiency in the operation of financial institutions, companies, governments and investors in building businesses and contributing to growth of the wider economy.

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